Phoenix Real Estate Representative Rental Rates and Affordability

Jonathan Dalton, Phoenix Real Estate AgentOne of the indicators of the state of the real estate market is the relationship between rental rates and mortgage costs. People often will be willing to pay a little more to own a property versus renting, but there are limits.

Below are actual rent rates of properties leased within the last week. For purposes of comparison, I’m using the lowest listed rent in the Arizona Regional MLS for a representative property (at least 3 bedrooms in most cases, 2-car garage, etc.).

The only city missing, at least for now, is Phoenix – it’s far too large an area to try and cover with one or two properties and I’m debating whether to go the ZIP code route:

AVONDALE

  • 3 bedroom, 2 bath, 1575 square feet – $895
  • 4 bedroom, 2 bath, 1796 square feet – $945

BUCKEYE

  • 3 bedroom, 2 bath, 1690 square feet – $850
  • 4 bedroom, 2 bath, 1096 square feet – $850

EL MIRAGE

  • 3 bedroom, 2 bath, 1308 square feet – $895
  • 4 bedroom, 2.5 bath, 1495 square feet – $895

GILBERT

  • 2 bedroom, 2 bath, 1074 square feet – $850
  • 3 bedroom, 2 bath, 1283 square feet – $895
  • 4 bedroom, 2 bath, 1566 square feet – $995

GLENDALE

  • 4 bedroom, 2 bath, 1793 square feet – $895

GOODYEAR

  • 3 bedroom, 2 bath, 1591 square feet – $900
  • 4 bedroom, 2 bath, 1959 square feet – $1,000

LAVEEN

  • 3 bedroom, 2 bath, 1714 square feet – $825

MARICOPA

  • 3 bedroom, 2.5 bath, 1529 square feet – $850
  • 4 bedroom, 2 bath, 2619 square feet – $895

PEORIA

  • 3 bedroom, 2 bath, 1235 square feet – $850
  • 4 bedroom, 2 bath, 1693 square feet – $1,095

QUEEN CREEK

  • 3 bedroom, 2 bath, 1359 square feet – $775
  • 4 bedroom, 2.5 bath, 1904 square feet – $775

SURPRISE

  • 2 bedroom, 2 bath, square footage unlisted – $850
  • 3 bedroom, 2 bath, 1434 square feet – $895
  • 4 bedroom, 2 bath, 1615 square feet – $875

TOLLESON

  • 3 bedroom, 2 bath, 1436 square feet – $950
  • 4 bedroom, 2.5 bath, 2170 square feet – $895

So the question becomes, what do the numbers tell us? Not much without the second part, which is the price to purchase in all of these communities. And those numbers will come tomorrow (sorry, you’ll have to come back again.

I can tell you the rents shown are higher than what has been present for some time. For instance, Surprise and El Mirage three-bedroom homes were under $800 for most of the past year as there was increased pricing pressure from investors searching for tenants and sellers looking for a second option when they couldn’t sell.

There are two factors that can close the gap, obviously – decreased home values or increasing rental rates. The former’s more likely than the latter but that doesn’t make the latter entirely implausible. And proportionally, a rise in rental rates tend to equal larger jumps in sales value.

An easy way to ballpark the cost of a mortgage payment will be somewhere is to figure a payment of about $6 or $7 monthly per thousand. So a $25 increase in rents has the same impact as a drop of about $4,000 in sales price. That’s 2% on a $200,000 home.

Again, this isn’t to say rental rates will continue to rise – not with inventory still high. But it’s something definitely worth watching.

Or at least I think so … if you also think this is worth a recurring post, either weekly or monthly, jump into the comments.

[tags]Phoenix real estate, real estate affordability, real estate values[/tags]

Jonathan Dalton

Jonathan Dalton is a 40-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at allphoenixrealestate.com.

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